What is NHS privatisation? (anatomy)

Privatisation’ is a politically-charged term without a precise definition. In Britain it is associated with the sell-off of nationalised industries and utilities under Margaret Thatcher and John Major. The classic model involved whole enterprises being moved into private ownership through the mass sale of shares. But historically this is only one manifestation of privatisation.

Some supporters of privatisation have defined it so broadly as to mean “the act of reducing the role of government, or increasing the role of the private sector, in an activity, or in the ownership of assets.”[1] Academic definitions accept that the deregulation of state monopolies, the outsourcing of state responsibilities and the cessation of services that were once offered by the state can all constitute privatisation.[2]

Privatisation has become more controversial because of the evidence around its impact. Ministers often refute accusations of it by saying that there is no 'sell off' of the NHS, but many of the ways in which the the private sector have been involved in the NHS would qualify as privatisation according to these academic definitions.

Academic definitions see outsourcing as a type of privatisation. The scale of outsourcing in the NHS has increased hugely after the passing of the Health and Social Care Act 2012. Companies and charities could bid to run almost any type of clinical services.

Over the last 10 years policy makers have believed that competition can help to improve the standards of health services. They introduced regulations to make sure NHS contracts were put out to tender.  NHS hospitals had to compete with private companies and charities for NHS contracts. Organisations were created to enforce competition rules and this framework has resulted in some legal cases by companies trying to improve their access to this new NHS market
Some analysts believe that in order for privatisation to succeed public services should be curtailed or restricted. This could happpen as part of a strategy or as result of costs pressures.
The government policy of underfunding the NHS (average rises of around 1% for 8 years) has stopped the NHS from raising its capacity with patient demand. Consequently the NHS is now more reliant on the private sector for help providing core services.


[1] E Savas, Privatization: The Key to Better Government 3, 1987
[2] See P Starr, The Meaning of Privatization, Yale Law and Policy Review 6, 1988. He identifies four types of privatisation: “First, the cessation of public programs and disengagement of government from specific kinds of responsibilities represent an implicit form of privatisation. At a less drastic level, the restriction of publicly produced services in volume, availability, or quality may lead to a shift by consumers toward privately produced and purchased substitutes (called "privatization by attrition" when a government lets public services run down). Second, privatization may take the explicit form of transfers of public assets to private ownership, through sale or lease of public land, infrastructure, and enterprises. Third, instead of directly producing some service, the government may finance private services, for example, through contracting-out or vouchers. Finally, privatization may result from the deregulation of entry into activities previously treated as public monopolies.”

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